Before investing in an auto protection plan or filing an extended warranty claim with your provider, find out who really sells and manages these contracts and what the associated terminology means. For example, an auto warranty agency can sell vehicle service contracts and also be the direct administrator that handles the claims process. Some companies can instead be brokers, acting as the go-between that connects buyers with other third-party providers or insurance companies that sell the warranties. Keep reading to learn more.

Terms Defined: Seller, Administrator, and Insurer

Seller or Broker: Any organization or auto warranty agency that sells extended car warranties or vehicle service contracts (VSCs). Sellers can be an auto manufacturer, car dealership, or an independent third-party or insurance broker. The seller and the contract’s administrator can also be the same company, like Endurance Warranty Services.

Administrator: This is the company that processes claims and provides customer support. Administrators ensure the terms of the agreement are met and the exclusions are followed. They also coordinate with auto technicians to schedule the repair work and then arrange for payments to be sent to the repair shop or the vehicle owner as reimbursement.

Obligor vs. Administrator: An obligor is legally responsible for fulfilling the terms of an auto protection plan or vehicle service contract and disbursing the funds for an approved claim. The obligor can be the contract’s provider (like a third-party administrator), a dealer (dealer-obligor), or an insurance company. Hence, a contract obligor can also be a direct administrator.

Service Contract Insurer: A separate insurance company that provides the financial protection/backing (i.e., the insurance policy) to the obligor to cover the potential repair costs under a service contract. An insurance company can also sell extended car warranties, either directly or by underwriting them through a third-party insurance provider.

Pros and Cons of Each Contract Setup for Drivers

If your motor vehicle’s original factory warranty has expired, you can still safeguard your vehicle with additional coverage. Learn more about the benefits and drawbacks of each contract type before you start shopping for plans.

Manufacturer Extended Warranties

Pros:

• The authorized dealership manages the claim process.
• Dealers handle the repairs and file claims for reimbursement from the manufacturer.
• Factory-trained technicians make the repairs using OEM parts.

Cons:

• Contract availability is based on a vehicle’s age and mileage.
• Contracts are typically more expensive than other third-party options.
• The fine print often lists additional exclusions and stricter requirements.
• Customers have fewer coverage options to pick from.

Dealership Extended Car Warranty (or VSC)

Pros:

• Buyers can add the cost of the contract to their auto loan.
• Coverage may be transferable to the next owner.

Cons:

• Contracts are not available for purchase at any time.
• Claims are filed through a third-party administrator.
• Exclusions may specify who can provide the repairs.
• Drivers may have to pay the repair bill upfront.
• Contracts can be more expensive than other third-party options.

Third-Party Warranty or Vehicle Service Contract

Pros:

• Contracts are available for older used cars and high-mileage vehicles.
• The terms may allow the use of any ASE-certified repair shop.
• Buyers have access to more plans, customization, and payment options.
• Contracts include extra benefits like roadside assistance and rental car services.
• Coverage may be transferable to the next owner.

Cons:

• Claim processes can be complicated if providers aren’t direct administrators.
• Some contracts require out-of-pocket payments and eventual reimbursement.

Shop Networks, Labor Caps, and Parts Sourcing Explained

Vehicle owners with active factory warranties are limited to using service centers within their manufacturer’s authorized shop network for covered repairs and maintenance. Often, the dealership’s service department will perform the work. On the other hand, drivers who have third-party vehicle service contracts may be able to use any certified repair shop for authorized repairs.

Additionally, active manufacturer warranties will typically cover the labor costs associated with eligible repairs. However, a labor cost limit may be listed within the terms of an extended warranty or vehicle service contract. What does that mean? If an auto shop charges $150 per hour for labor, and your contract states it will only pay $100 per hour, then you are responsible for paying the $50 per hour difference.

Your service agreement will also specify which parts auto technicians can use for repairs. Typically, manufacturer-back contracts will only permit the use of OEM parts. However, other third-party warranties—whether purchased from a dealership or independently—may allow the use of aftermarket parts as well.

Follow the Money: From Breakdown to Authorization and Payment

To gain a clearer understanding of how money moves once you file an extended car warranty claim, consider the following claim’s process flow:

1. Vehicle breakdown and diagnosis: Take your vehicle to an authorized repair shop to diagnose the mechanical breakdown. The technician will contact your contract’s administrator for authorization.
2. Claim authorization and approval: The administrator will review the claim and determine if your contract covers the repair. In some cases, the administrator may send an inspector to examine your vehicle before approving the repair work.
3. Customer payment (deductible): If your contract has a deductible, you will pay that amount directly to the repair shop once the technician completes the approved work.
4. Auto repair shop payment: After collecting the deductible, the repair shop will submit a final invoice to the administrator for the remaining balance. The administrator will then send the payment directly to the repair facility.
5. Reimbursement (potential): If the extended warranty agreement requires the vehicle owner to pay for the repair upfront, then the policyholder will have to pay the invoice and then file a reimbursement claim to get the money back.

Documentation That Speeds Approvals

To speed up the process of filing an extended car warranty claim, ensure you have the following documents on hand:

• A copy of the warranty agreement and the policy/contract number.
• Repairs and maintenance records, including receipts and invoices.
• Proof of ownership, including the vehicle sales agreement and VIN.
• A detailed description of the problem with photos or videos, when applicable.
• Policyholder’s contract information.
• Vehicle information, such as mileage and fault codes.

A Pre-Claim Checklist You Can Save

1. Write down the problem, noting any noises, smells, fluid leaks, etc.
2. Gather all necessary paperwork.
3. Thoroughly review your vehicle service contract and identify terms and exclusions.
4. Find your administrator’s contact information.
5. Identify an approved service center.
6. Be ready to pay any applicable deductible.

Simplify Your Vehicle Claims with Endurance

Filing a claim for your extended car warranty or vehicle service contract shouldn’t be stressful. At Endurance, our goal is to make the process as easy as possible. Since we are both the seller and direct administrator for most of our plans, you typically won’t have to deal with any third parties—we handle everything.

To learn more, reach out to an Endurance plan advisor at (800) 253-8203 or request a FREE quote. You can also see your price and plan recommendations right away through our convenient online store.

Read more insightful articles and FAQs on our extended warranty blog.